Earlier this year, I applied for and received two American Airlines Citibank Visa credit cards, one for personal use and one for business. The annual fee was waived for the first year.
The signup bonuses were 50,000 miles each but to earn the 100,000 miles, there was one catch. Each card required that I spend a minimum of $3,000 within 90 days to earn the bonus or a total of $6,000.
I don’t know about you but that’s not my normal credit card usage. So I resorted to some travel hacking techniques you might be familiar with. Here’s how I did it.
Bluebird helps out
To boost spending I used a Bluebird card from American Express, which is free. Then I went searching for Vanilla Reload cards that could be purchased at $500 each for a fee of $3.95.
I was able to purchase a couple of these at a local CVS pharmacy at a maximum value of $500 each. Then all I had to do was transfer the balance of the reload card to the Bluebird card. After that I transferred the Bluebird card balance back to my checking account so I could pay off the credit card.
The $3.95 per $500 is almost 1% and that wouldn’t make sense except for the fact I was using the purchase to qualify for such a large amount of miles as a signup bonus. The only problem was the local CVS stopped allowing for credit card purchases of the Vanilla Reload card.
PayPal to the rescue
PayPal also has debit cards that are similar to Vanilla Reload and I bought a few of these at 7-11 for $500 and a fee of $4.95. Then I transferred the $500 balance of each card to my PayPal account. Eventually I moved the funds in my PayPal account back to my checking account so I would have the funds to pay off the credit card.
But I ran into the same problem at 7-11 as I did at CVS. They seemed to have changed their policy where they no longer allowed credit card purchases of debit cards. The policy seemed to vary from store to store and I was never sure whether I could purchase a card.
Also, I had heard that PayPal has a reputation of closing accounts if you have a large amount of such transfer activity so I didn’t want to abuse the privilege.
I still needed to spend $2,500 to make the total of $6,000 and I found one other method.
The first time the IRS has helped me
The IRS lets you pay your taxes with a credit card through various third-party vendors but they charge a fee of around 2%. Like the fee I paid at CVS and 7-11, it wouldn’t make sense except for the fact I was earning a large signup bonus. So I paid some taxes in advance that would be due anyway.
After using the cards for normal spending, buying several $500 cards from both CVS and 7-11, and paying some taxes in advance I was able to meet the minimum spending requirements and earned the bonus of 100,000 American Airline miles. Total fees I paid? Less than $100.
A nearly free trip
I think it was worth the time to figure out how to meet the minimum spending requirement considering that 100,000 miles are easily worth $1,000 at 1 cent per mile. That’s about the best rate you can earn if miles are exchanged for US domestic coach flights. The miles are often more valuable on international flights especially if exchanged for business or first class tickets.
For example I recently booked a flight from San Diego to Florida where I’ll stay for a few days. Then another flight to the Bahamas for a few days and returning to San Diego. I was able to book the flight for 60,000 miles which included first class on the return flight from the Bahamas to San Diego. Those tickets would have cost $2,000 so the miles I exchanged were worth more than 3 cents each.
While I often pay cash for a trip, it’s definitely more fun when the flight cost is nearly free 🙂
photo credit: American Airlines